GOVERNMENT has always played its part in modern ecbnomic development. As the Industrial Revolution was gaining momentum, the government in Britain was busy removing institutional and legal barriers to the capitalist path. A more direct intervention by way of imposing protective tariffs and covering gaps in industrial development has been evident among all the late-comers. In the nineteenth century the state largely drew the line along creation of the requiste institutional and infra-structural facilities.

A notable exception was Japen where the government assumed a pioneering role in the development of a broad spectrum of industries ,ranging from textiles to steel. More striking is the fact that the industries developed through the initiative of the state were sold out to private ownership after their viability was amply demonstrated.This is hailed as a unique feature of Japanese economic development. The Japanese model is being followed by some of its erstwhile colonies like Taiwan and South Korea. Though in its formative stages, the creation of a national sector, by throwing minority shares of public enterprises to private subscription, as propounded by T A Pai, Minister for Industrial Development, stems from the ideological moorings which inspired the Japanese model of industrialization.

The state was assigned a much bigger role in India than in Japan. A tremendous backlog in development was the legacy of the colonial period. The heritage of feudal and semi-feudal relations in land and the family-dominated monopolistic and oligopolistic industrial and commercial organizations as well as the values and behavioural patterns associated with them constituted major obstacles to economic progress. The economy was characterized by an acute shortage of capital. Private sector lacked the know-how of modern science and technology for exploiting natural resources. Hence the government had to take on comprehensive responsibilities as institution-builder, mobilizer, poineer, promoter and regulator.

All the same, the entrepreneurial role of the state is largely restricted to those difficult tasks which were either beyond the means of